Archive for the ‘Dave Ramsey’ Category
for now, at least.
I’ve had a lot of fun updating this blog since I started it nearly three years ago, but the time has come (at least, for now) to move on.
I started this blog back in January 2007 after returning from my first ever trip to CES. As lame as it sounds, that trip literally changed my life and ultimately the direction I wanted to take it. I met some amazing people during and shortly after that trip that showed me anything was possible and I could make one of my dreams a reality.
This blog has been online and active for 2 1/2 years which is an eternity in the blogsphere. So why am I deciding to end it now?
The first reason is time, or lack of. I don’t seem to have as much free time as I did when I started this adventure. I have since moved backed closer to all of my friends and have taken on additional review opportunities online. This gives me less time to devote to the blog, which needs a lot of attention and dedication to be successful. Not only do you have to update your blog frequently, it is also important that you read other blogs and comment there as well. Stuff like this helps to drive traffic to your own site.
In what seems to make very little sense, now that I have moved closer to my friends, I tend to do less “exciting” things and thus, there really isn’t as much interesting stuff for me to post here. Blog posts used to come naturally and I always had something to talk about or an opinion to voice, but that doesn’t seem to be the case anymore. I guess you can say I got boring!
When I started this site, social networking was still relatively new. Now that Twitter and Facebook have changed the way we communicate and share information online, I can simply share my experiences through these mediums instead. Feel free to follow me on Twitter or add me as a friend on Facebook and I will do the same.
I still have a lot of things I want to accomplish and unfortunately this blog is at the bottom of the list. I toyed with the idea of monetizing this blog and changing its focus or even starting a new niche blog altogether, but as I have said in the past, that just didn’t feel right. There are a lot of things about blog marketing and such that I would have to research beforehand and again, I don’t have the time for that right now.
For now, however, I am just going to keep on keeping on and doing the things I love. I still love photography and will continue to post pictures on Facebook and Flickr. I’m still a big Dave Ramsey fan and hard at working paying off all of my old debt. Heck, I might even change my outlook on being single LOL.
All kidding aside, I want to thank everyone who has stopped by, read a post and commented on something here. I am certain the site wouldn’t have lasted this long had it not been for the reader participation during some of the blog’s more active times. I will be leaving the site online as I feel there are some valuable posts that others could learn from.
Final blog stats:
769 total posts
Today marks the two year anniversary of this blog! It was on January 20, 2007 that I made my very first post to this blog. I started this blog just after attending the 2007 Consumer Electronics Show where I met some really beneficial people, like Bob Buskirk, a fellow tech site owner.
Since that time, this blog has seen 745 posts and 1940 comments over the past two years, which is pretty decent for a non-niche blog. I have really enjoyed updating the blog, sharing aspects of my tech site and personal life with my readers.
I have toyed with the idea of monetizing this blog or perhaps starting a niche blog (probably personal finance), but thus far, I haven’t acted on either of those ideas. We shall see what happens in 2009.
Updates as of late have been few and far between, which haven’t been on purpose. It just seems that I have less and less time to devote to the blog, but I will look to change that from this point forward. So, what’s been going on since my last update?
A CES 2009 No-Show
This was the first year since I started going to CES that I didn’t make it to Vegas for the annual technology trade show. I tossed around the idea of attending late last year but ultimately decided against it, mostly for financial reasons. CES is such a blast and equally as beneficial for my tech site, as I get to network and make new contacts with potential sponsors and other site owners which is invaluable. But, I didn’t let that get me down and did what I could from home and managed to secure a relationship with Intel, which is absolutely huge!
CES 2010 is definitely in my future, granted the show doesn’t go the way of COMDEX and cease to exist next year. Attendance was down this year but let’s hope they give it a few more years to rebound.
Ole Miss Wins 2009 Cotton Bowl
Ole Miss shocked the country and took Texas Tech to the woodshed in the 2009 Cotton Bowl on January 2, coming away with a 47-34 victory and proving once again that the Big 12 is overrated. The Rebs finished the season very strong, with a 31-13 win over LSU in the 1st annual Magnolia Bowl and absolutely dismantled Mississippi State 45-0 in the Egg Bowl. Ole Miss finished 15th nationally and is already being ranked as high as 5th in preseason polls for next year.
These accolades are well earned. After all, Ole Miss was the only team to beat Florida, the eventual National Champion. 2009 will be a great year for sure. Can you say SEC Champions?
I told myself I would probably never buy another gaming console, especially a current-generation unit. They are just too expensive and I don’t play games enough to warrant the expense. But here I am, with a 360!
I ended up buying a Pro model from Josh after our last LAN party. He purchased two additional units for use at the party but turns out, we didn’t need them. I got a heck of a deal which is really the reason I bought it. And thanks to Left 4 Dead, I have actually been playing it quite a bit, as a group of about 5-6 of us play multiplayer almost nightly. If you are on Live and want to add me, just leave a comment with your Gamertag or e-mail me at: email@example.com
Paying Off Debt
Since I started following Dave Ramsey about a year ago, I have cut out a ton of useless spending in my budget and have been working very hard to pay off debt that I have accumulated over the years. About 85% of my debt is student loans and I have been paying those off as fast as I can. I have only a single payment left on the one loan I have been attacking which is pretty exciting. My focus after that is the one remaining credit card balance I am carrying, then it is full steam ahead on my large student loan.
At first, it was really tough to cut back on unnecessary spending and trying to save money, but now that I have been doing it for almost a year, it is actually fun. I enjoy seeing how frugal I can be each month and how little I can get by on. Odd, yes, but it is very motivating.
Keeping Busy With Work
Many people wish they could work for themselves at home, create their own schedules and be their own boss. The reality is, it is tough. The reason I say this is because you are never “off work”. With a traditional job, once you leave the office, you are free. You don’t have to worry with work until the next day or after the weekend. When you work for yourself, you are always thinking about work and what needs to be done and when you are going to do it. I love what I do but it is pretty stressful and there is a lot of responsibility. I don’t think most people could do it.
Anyway, things with OCIA.net are still going strong. I have been focusing on attaining more sponsorships for the site, which means sharing the latest and greatest hardware with our readers. Things look bright for 2009 and I can’t wait to see what the year brings!
I have been looking to hire an additional reviewer and have taken a chance on two people in the past several months, both of which have screwed me over and basically stole the review items without doing any work. Its frustrating when someone with no morals comes along and throws a monkey wrench into what you have worked hard to do just for a free product. Its even more frustrating when you see these people move on to the next site they plan to scam.
On that note, if you are into the tech scene and think you might be interested in writing for my site, shoot me an email and we can talk.
I have also been doing some freelance writing for another tech site based in Mexico, Techspot. Things with this site have been going really well and I have had a good time reviewing for them and look forward to continue our relationship in 2009.
I had never heard of a Texas Pickle until just recently. Adam had been telling me about then for a while and finally decided to make a batch.
Basically, you take jalapenos, remove the insides, fill with cheese then wrap the entire thing in bacon. Bake in the oven or cook on the grill and you end up with what you see above!
I love trying new foods and the Texas Pickle was no exception and in fact, it was very good. I am not a huge fan of spicy foods but once gutted and cooked, the jalapeno was not spicy at all. I would recommend you give them a try sometime for sure.
And with that, I’m off to go make dinner…
As you can probably tell by my absence of posts lately, things have been pretty busy on my end. This is the “busy season” for hardware sites, as manufacturers are looking to get as much exposure as possible for the holiday buying season. I have been busy getting all of my staff “stocked up” with review items and have even taken a few on myself.
This is the latest item I am working on, a SilverStone FT01 Case, which features a Uni-body frame construction from the flagship Temjin TJ07.
We saw this TJ07 at SilverStone’s booth at the 2007 CES and have been anxious to check out their uni-body design ever since. Look for my review of the FT01 to hit OCIA.net sometime next week. We are also working on putting together a holiday contest / giveaway of sorts. Look for that to hit sometime right after Thanksgiving!
In other hardware news, I have started doing some freelance writing for another tech site, which has given me the opportunity to check out some really cool hardware and has been a blast so far. I have a big article in the works as well as two other reviews for that site, which I will link to when they are published.
Aside from computer work, there has been quite a bit going on lately that I want to take a minute and touch on.
Thanksgiving is just around the corner and we all know what that means: lots of great food!
Josh and I are going to make deep fried turkey(s) this year. I first had deep fried turkey a few years ago at Keith’s sister’s house and OMG, it’s the best food I’ve ever had! A deep fried turkey is so juicy and tender - the exact opposite of what a traditionally cooked turkey is. I will be recording the cooking process and posting the video on here and YouTube, so be sure to check that out.
Other than that, Keith’s family has invited me over once again for their Thanksgiving dinner. They have invited me the past several years and I am really appreciative of that. I don’t really have a lot of family so it’s cool to be around them around the holidays.
On a sad note, Thanksgiving time has been a bit less happy, as it always reminds me of my mom. She passed away 7 years ago today, so this time of year always brings back those memories
The CHL hockey season kicked off about a month ago. Josh and I purchased half-season tickets for the Mississippi RiverKings and have attended a handful of games so far. As of writing, we are off to a 7 - 6 season… not the best, but it could always be worse!
If you have never attended a hockey game, I would encourage you to give it a try. I never liked hockey but was invited to go to a game with a friend nearly 13 years ago (wow, has it been that long?!) and have been hooked ever since. Being there in person is so much fun and is nothing like watching it on TV, which I agree is pretty boring!
In other sports news, my college football team, the Ole Miss Rebels, have been having a pretty good season, especially compared to last year. We are 6 - 4 on the season and gained bowl eligibility last Saturday. This is the first time the Rebs have been bowl eligible since the 2003 season. The only question that remains now is, which bowl will we be headed for?
The final two games of the regular season will determine that. We play LSU this Saturday (2:30 pm CST on CBS) and Mississippi State on Black Friday. If we win out, which is very possible, we are almost 100% headed to the Cotton Bowl in Dallas, Texas. A loss or two losses and we are more than likely headed to the Liberty Bowl in Memphis, Tennessee.
I am hoping for a bid to the Cotton Bowl, as that is a much better bowl, but a trip to the Liberty Bowl would mean I could possibly attend, which would be sweet in itself. It will be interesting to see how the rest of the season plays out, especially the LSU game this weekend. I’m betting Ole Miss pulls out the victory - you heard it here first!
The Ultimate Fighting Championship has been putting on some pretty good events lately. Since moving to my new place, we have ordered each UFC pay-per-view and have been having parties here on fight night. The most recent was UFC 91, which pitted champ Randy Couture against the 3 - 1 newcomer Brock Lesnar.
Lesnar, formerly in the WWE, is an absolute monster and I fully expected him to be the new UFC Heavyweight champion after the night was over. He came in weighing 40 pounds more than Couture, is 18 years younger and is super quick and agile for his size.
And sure enough, Lesnar ended things in the 2nd round after catching Couture with a shot that dropped him to the mat. Lesnar capitalized and reigned down a series of hammer fists that forced the ref to call the fight. Congrats to Lesnar on this victory and I will be looking forward to seeing him defend the title against the winner of Nogueira / Mir.
Speaking of that fight, which will take place at UFC 92 on December 27, there are also two other headlining fights on that card. The first pits Light Heavyweight champion Forrest Griffin against undefeated Rashad Evans in what should be a great fight. The other main event caliber fight that night is Quinton “Rampage” Jackson against Wanderlei Silva. Jackson has fought Silva twice and both times, he has pretty much been destroyed. Rampage is one of my favorite fighters so I am certainly hoping he pulls out the victory. As they say, third time is a charm, right?
Big 3 Bailout
Oh geez, don’t get me started! Are you friggin’ serious? It totally baffles me how companies that make SOO much money, as these three do… they have one “bad” year and they are on the verge of bankruptcy! Where the hell did all of that money you made over the past several years go? Seriously. Do they simply not keep money in the company?
I certainly hope Congress doesn’t bail out these idiots. What kind of message will that send to other companies if they do?
Just because people don’t want to buy your products in flocks, for whatever reason, you are instantly entitled to have your company saved by the government? What’s next, Nikon asking for help because they aren’t selling enough cameras, Microsoft asking for money because they aren’t selling enough copies of Windows? Seriously, where does it stop?
So let’s say the Big 3 go bankrupt and all those people lose their jobs. Guess what? THERE ARE OTHER JOBS IN THIS COUNTRY YOU CAN DO! So many people tend to think that losing their job would be the end of the world. No it won’t. Go get a different job.
Sure, it would be a change of pace and you may not even like it, but it isn’t disaster. You can still survive.
Economy In General
Stocks continue to drop, unemployment is up, etc. The world is coming to an end!
Gah, whatever. Have you been to Wal Mart recently? I went last Saturday and it was a mad house. Wonder where all of these people are getting their money! And when Black Friday rolls around, I have money that says you will still see people lined up in front of all the major retail stores hours before they open!!
Sales may be down this year compared to past years, but is that a bad thing? Maybe that just means people aren’t consuming like a fat kid sitting up to his neck in skittles. It’s amazing how much junk people buy and they think that junk is going to make them happy.
All jokes aside, 90% of the economy is between your ears. If things are right in your house and you know how to control your finances and not spend like a drunken Congressman, everything will be fine and you have nothing to worry about.
There are so many people that aren’t affected in the least by the current state of the economy. Those people call in every day to the Dave Ramsey show and tell their stories. How are they able to survive this horrible economy without losing any sleep about it?
They are debt free. They have no credit cards or other stupid payments holding them back.
So yeah, that’s about all I have for today. I will try to post updates a bit more frequently over the next few weeks. Please feel free to chime in with your thoughts in the comment section below!
Posted in Dave Ramsey
by Shawn Knight
on October 12, 2008
Josh and I attended Dave Ramsey’s Total Money Makeover Live event in Birmingham, AL yesterday.
Birmingham is about 3 1/2 hours away, and since the event started at 1 p.m., we decided to leave extra early (7 a.m.) to ensure we got good seats. The drive went really well and was a straight shot down the highway.
After grabbing a quick lunch at Subway, we were off to the event. The show lasted five hours with two 25 minute intermissions. The event itself was really well prepared and performed. Dave is an excellent live speaker who mixes in a ton of humor with his teachings.
The majority of the show was just a refresher for me, since I have listened to the Total Money Makeover audio book a few times and listen to his radio show almost every day. You were given a workbook when you entered, and Dave loosely worked through the book during the interactive show.
Dave also talked about the current state of the economy and how he has been preaching his “no debt” plan for ages.
In years past, the mainstream news media would ridicule him, call him a simpleton for not using credit cards and basically discredit his concepts. But now with all of the bad home loans, consumers up to their eyeballs in credit card and automobile debt, suddenly everyone thinks he is a genius!
The event was entertaining and it certainly helped to motivate me even more to follow his teachings. The great thing about Dave’s teachings are that there are no secret get rich quick schemes or other bogus information. His plan is overly simple, and it works EVERY TIME… but be prepared that it will take a lot of discipline and time on your part. As he says, it is all common sense - but most people don’t grasp this because have been brainwashed into thinking you need to build your FICO score and use credit to be successful with money. Credit is a total sham and if you want to take control of your finances and build wealth, do like myself and millions of other Americans have - DON’T USE CREDIT!
Posted in Dave Ramsey
by Shawn Knight
on October 8, 2008
is a load of crap. There, I said it.
What’s in the envelope labeled “CCs”, you ask? Credit cards, of course! Back in March when Josh turned me on to Dave Ramsey and his common sense teachings, I emptied my wallet of all of my credit cards, put them in this envelope and sealed it up.
That’s right, I haven’t used a lick of credit in over six months. In fact, I’ve actually paid off all but one of the cards in full, following the guidelines of the Total Money Makeover.
But… you can’t “NOT” use credit, right? After all, just today, President George Bush had this to say during his speech at Guernsey Office Products:
See, when credit runs dry in one part of our economy, there’s a chain reaction. So you want to sell a desk to somebody. That person needs to borrow the money in the short term to buy the desk. And yet, because the credit has tightened, because some banks are lending, a potential customer doesn’t have the money to buy your desk, and that affects you. So a lot of the talk that you’re hearing about credit crunches applies directly to your business here at Guernsey. It hurts your suppliers. It affects the entire economy.
Am I the only one that thinks this sounds absolutely absurd? How about you friggin’ pay cash for the desk - problem solved.
I want to take a few minutes and mention some of the things I keep hearing about on the evening news, which BTW, is getting very old.
Banks are to blame for giving home loans to people who couldn’t afford to buy a house. Why / how did they do this? They simply looked at an individual’s credit score and granted the loan based on that single number. Moral of the story for banks: credit scores are retarded. Credit is built by borrowing and paying back money over and over. Any yahoo can do that. Do real work, a process known as manual underwriting, like they did in the “old days” to determine if someone can afford a home. Verify if someone has a job, a steady income and a nice down payment. Problem solved.
But, the media keeps saying that people can actually get home / car loans if they have good credit. So, there isn’t a “credit freeze” for people in good standing? Meaning, people with lousy credit can’t get home / car loans? … what is the problem there? If those people can’t afford to pay a loan, they shouldn’t be given one. But yet, the government is passing bills to pump a ton of money into the “market” to free up the “credit crunch”… for people who can’t afford to repay loans? Brilliant!
I saw a story on the news the other day where businesses, in this case, a car dealership, was unable to make payroll for the week because they couldn’t borrow the money from their bank. Are you serious? You run a business… yet, you don’t even have enough money to pay your employees without taking out a loan each week? Really? How about you revise your business model or shut down shop, because your current plan doesn’t work. Problem solved.
Credit is absolutely out of control in this day and age and really, everyone is to blame. As “crazy” as it sounds, imagine if credit didn’t exist. Imagine if people acted like adults and saved money to buy things they needed, instead of acting like a spoiled 5-year-old who wants everything now now now. Imagine if people lived on less than they made. Imagine if people actually saved money for retirement. What if you had a cash emergency fund for when something unexpected happens - it would only be a minor annoyance instead of a financial disaster.
All of these “myths” are a reality for millions of smart Americans. Americans who are intelligent enough to realize that life is much better without the hassle of credit. These people aren’t up to their eyes in credit card debt. These people realize that their income is their biggest wealth building tool. You can’t build wealth if all of your money is spent before you even get home! Open your eyes America.
In closing, life has been just fine for me without credit. I don’t need credit or credit cards. Yes, I am still paying off my stupid tax, but luckily, I got a clue before I was deeply in debt like many Americans are at this very moment.
Unfortunately, it’s too late and that silly bailout bill has already been passed. Too bad our leaders didn’t consider Dave’s Common Sense Fix.
Posted in Dave Ramsey
by Shawn Knight
on June 13, 2008
It never ceases to amaze me how things look “on the other side of the tracks”. Before I started following financial expert Dave Ramsey, I was just like every person I am about to rant on. I was “normal” - I did things with money that most everyone does… stuff that is socially acceptable and never gave it a second thought. When someone in the “know” would mention how money should be handled, I laughed and thought they were crazy. I had the mindset of a child - I did what felt good. If I wanted something, I bought it, even if it required me going into debt to do so. I have no shame and will admit, they were right - I was wrong.
The more money I make, the more money I can spend
I have a few really big qualms that I want to discuss here today. The first is, everyone seems to think, “the more money I make, the more money I can spend”. Someone gets a new job or a promotion, and the first thought that pops into their mind is, “what can I go out and buy now!?”. While that is bad enough, I have even witnessed people who haven’t even got that new job and are already planning how to spend that money, whether it be a new car, moving, shopping, etc. That is just sickening! Just because you make more money doesn’t mean you have to find a way to spend more.
And if they don’t have the money to buy something with cash, they rationalize their decision and “figure out” a way to justify borrowing money to make it happen. The reasons you will hear vary widely and are quite humorous: I don’t want to drive a crappy used car, I want to buy a hybrid to save money on gas, I work hard and I deserve a new ________, etc. Oh, shut up! You aren’t special, nobody is “too good” to drive a used car. Spending 25-30 grand on a new hybrid just to save $10 a week in gas doesn’t make sense financially. You would have to drive that car to the moon and back to get a return on your money. And, other people work just as hard as you, princess, you aren’t so special that you “deserve” something new all the time.
The second thing I want to touch on is knowing where your money is going each month. When you say the word “budget”, again, many people think that is below them and is only something that stupid people do. So wrong! A budget is MANDATORY if you ever want to be successful with money. You need to know where your money is going each month in order to make it work for you. I used to wonder where all of my money went, and then I started keeping track of where every dollar went each month. I found that I spent way too much money on food and was able to cut my spending on food by 50%. A budget is a rude slap in the face financially and will reveal exactly where all of your money goes each month.
Once a budget is in place, you then need to cut your lifestyle and your spending drastically. If every dollar comes in, and every dollar goes out, you will never be able to save money and pay cash for nice things you want. You will always be living paycheck to paycheck, on the brink of disaster. If you lose your job, that can push you over the edge into financial turmoil. That doesn’t sound like a fun place to me.
Cutting your lifestyle isn’t easy, but it also doesn’t mean you have to stay at home every day and be a total hobbit. You can take it to the extreme and do that and save a TON of money… or you can do a milder version of it. Cut back on how much you go out to eat or how often you go see that new movie or buy a new video game. It may not sound like much in conversation, but those savings add up really quick and you will see that reflected in your budget.
The final thing I want to talk about is frustration… frustration after making the “jump” and being in the know. I consider myself a good person and a good friend, and it honestly hurts me to watch some of my friends be so foolish with money. What really gets to me is, when engaging in money talks with some of these people, it really shows how ignorant they are about money. They are just like I was at one time, which I can’t blame them for… but it really is an eye-opener to see every person recite the same BS reasons and thoughts about money. This is all stuff that they have been taught by society… and society is wrong! Like many other aspects in life, people won’t change unless they want to. I have to accept that, as much as I want to help people and give them advice, they just won’t listen until they are ready. Until then, I can only do what is best for me and will make me successful.
Let’s hear your thoughts on these topics! Do you live paycheck to paycheck? Do you save a percentage of your income each month? Do you do budget?
Posted in Dave Ramsey
by Shawn Knight
on June 4, 2008
Here we have another installment of Busting Debt and Money Myths With Dave Ramsey. In case you missed it, you can read part one here and the second installment by clicking here. Enjoy!
Myth: Debt consolidation saves interest, and you have only one payment.
Truth: Debt CONsolidation is dangerous because you only treat the symptom, not the problem. It is a CON because you just think you have done something about the problem. The debt is still there, as are the habits that you got in debt in the first place. News flash: you cant borrow your way out of debt - you can’t get out of a hole by digging out the bottom. debt is not the problem, it is the symptom of over spending and under saving. If you pay attention to how these programs work… sure, you may get a lower payment… but that comes at a cost of a longer term. In the end, you end up paying even more money because your terms are extended for longer. Don’t do it!
Myth: If nobody used debt, the economy would collapse.
Truth: Nope, it would prosper. let’s run through the scenario. What if every American stopped using debt of any kind in one year? The economy would collapse. What if every American stopped using debt of any kind in 50 years? The economy would prosper, although banks and other lenders would suffer. What would people do if they didn’t have ANY payments? They would save and spend money, not support banks. Saving and investing would cause wealth to be built at an incredible rate. Giving would increase and many social problems would be eliminated. Then taxes could come down and people would have even more wealth.
Myth: Everything will be fine when I retire. I know I’m not saving yet, but it will be alright.
Truth: Ed McMahon is not coming. There is no shining knight coming to save the day. This is the real world, where sad old people who are broke eat dog food. This is an emergency! You have to save! You have to invest for your future. You won’t be ok unless you make it that way. You are in charge of your retirement. Don’t think the government is going to help you when the time comes.
Myth: Gold and other precious metals are a good investment, and will help me if the economy collapses.
Truth: Gold has a lousy track record and isn’t used when an economy goes under. The average rates of return are 2% gain per year. In recent history, gold has a 50 year track record of 4.4%, about the same as inflation, and just above savings accounts. In that same time frame, you would have made 12% in a good mutual fund.
Myth: I can get rich quick if I join this group, buy a tape set and work three hours a week.
Truth: Nobody develops and makes a six figure income on three hours a week. It all sounds too good to be true because it is. The only person that makes money here is the person who owns the program you are joining, and they make money off you buying these silly programs. You should never join a money-making program that you have to pay a fee for, and don’t try to justify it by saying “oh, the fee is only $20 so if it doesn’t work, I won’t lose much”. I have personally heard this line from a friend and I couldn’t help but laugh. There is no secret to making money overnight, it just isn’t legit! The way to do that is work hard, live on less than you make, get out of debt and live on a plan. This is the only plan that will work. Nobody gets rich quick!
Myth: Cash value life insurance will help me retire wealthy.
Truth: This is one of the worst financial products available. A cash value policy is an insurance program that packages insurance and savings together. The returns on this are horrible. Your agent will tell you this is the way to go, but these policies never work out like they are said to.
Here is an example. If a 30-year-old man has $100 to spend per month on life insurance, he will find he can purchase an average of $125,000 in whole life insurance for his family for this price. The pitch is to get a policy that will build up cash for retirement. If the same guy purchases 20 year level term with coverage of $125,000, the cost will only be $7 per month, not $100. With the cash value option, the other $93 would seemingly go to your savings. Wrong. The first three years of savings go to expenses like commissions. After that, you get 2.6% interest a year for whole life.
Worse more, if you die early, the savings doesn’t go to your family; all they get is the $125,000 face value of the policy. The truth is, you’d be better to get the $7 policy and put the rest into investments. That means, when your 20 year term is up, you don’t need life insurance because you have a ton of money already saved up. You’ll be just fine.
Myth: Playing the lotto and other forms of gambling will make you rich.
Truth: Playing the lotto and other forms of gambling are attacks on the poor and people who can’t do math. It is a ripoff instituted by the government. Studies show that the zip codes that spend 4x as much as others are in the poor parts of town. The lotto and gambling offers false hope, not a way out.
Myth: I don’t have time to work on a retirement plan, budget, or estate planning.
Truth: You don’t have time not to! Most people concentrate on the urgent in our culture. We worry about our money and health only after they are gone. You need a budget! A budget is people telling their money what to do instead of wondering where it went.
Posted in Dave Ramsey
by Shawn Knight
on April 23, 2008
Today we will be taking a look at some more Debt Myths with Dave Ramsey. The myths he discusses in his Total Money Makeover are so common these days that nearly everyone takes them for fact. But, once you think about it, do the math, etc… you will see that they are all foolish! Enjoy!
Myth: Car payments are a way of life. You will always have one.
Truth. The average millionaire stays away from car payments and drives a reliable used car. Hint: that is how they became a millionaire! Taking on a car payment is one of the worst things you can do financially. A car payment is most peoples largest bill each month, besides their mortgage / rent.
Dave explains it like this. The average car payment is $378 over 55 months. Once this car is paid off, most people trade it in for a new car because they “need” it. What a waste of money! If you keep this $378 car payment throughout your normal working life (which is what most people do these days), from age 25 to 65, and invest it in a good growth stock mutual fund at 12% interest, you would have $4,447,084.01 at retirement. As Dave says, “HOPE YOU LIKE THE CAR!”.
So, what should you do? If you put $378 in a cookie jar for just 10 months, you would have almost $4,000 in cash to buy a used car. Sure, you aren’t expected to drive a 4k car the rest of your life. What you do is drive this car and save more money then trade up to an $8,000 car. After only 2.5 years, you will have a 12k PAID FOR car.
Taking on car payments because everyone else does it is not smart. Will your friends laugh at you because you drive a junk car for a bit? Sure. Who cares! If you are that superficial that you care sooo much about what other people think of you, well, your issues are deeper than just finances. You have to make a decision about looking good vs. being good. Looking good is when your broke friends are impressed by what you drive. Being good is having more money than they do.
Myth: Leasing a car is what sophisticated people do. You should lease things that go down in value and take the tax advantage.
Truth. Take a moment and think about it, and you will see that leasing a car is the most expensive way to operate a vehicle. Here is why.
The average interest rate is 14%. If you lease a car with a value of $22,000 for 3 years… and when you turn it in at the end of that lease, the car is worth $10,000. Someone has to cover that loss. You know that the auto giants aren’t going to put together a plan to lose money.
According to Smart Money Magazine, the average new car purchase for cash makes the dealer an $82 profit. When the dealer can get you to finance with them, they make an average of $775 per car. But, if they can get you to lease the car, the dealer can sell it to the bank or finance company for $1,300.
Car dealers make their money in the finance office and the shop, not in the sale of cars.
Myth: You can get a good deal on a new car at 0% interest.
Truth: A new car loses 60% of its value in the first four years. That isn’t 0%!
Dave lays it out on the line, simple and clear. “You can’t afford a new car unless you are a millionaire and can therefore afford to lose thousands of dollars all in the name of the neat, new car smell.” A good used car that is less than three years old is just as reliable as a new car.
A new $28,000 car will lose about $17,000 of value in the first four years that you own it. If you calculate that out, it is nearly $100 per week in lost value. Can you afford to throw away $100 per week? Many people do, and don’t even realize it.
The average millionaire drives a two year old car with no payments - they paid cash. Some people want a new car for a warranty. $17,000 for a four year warranty? You could rebuild the car twice for that price. Insane.
Myth: You should get a credit card to build your credit.
Truth: You won’t use credit with your Total Money Makeover, except maybe for a mortgage… and you don’t need a credit card for that.
This is one of my favorite myths. This myth means you have to get debt so we can get more debt because debt is how we buy stuff. News flash - cash buys stuff better than debt! Before Dave, when I heard about this plan, I thought it was silly and could never work. Ha, talk about me being wrong!
I hear you asking now, how do I get a home mortgage without credit? Simple - find a mortgage company that does manual underwriting, which means they look at your financial past and determine if you are responsible that way, the “old fashioned” way and don’t base it off a silly FICO (aka I LOVE DEBT) score. Through the manual underwriting, you can get a mortgage if: you have paid your landlord early or on time for two years - you have been in the same career field for two years - you have a good down payment - you have no other credit, good or bad - you are not trying to take a loan that is too big. Don’t let anyone tell you to go into debt to get a mortgage. As Dave says, “that is a lie!”.
As for “building credit” for other purposes, leave that to the losers.
Myth: You need a credit card to rent a car, check into a hotel or buy online.
Truth: A debit card will do all of that. The VISA debit card linked to your checking account gives you the ability to do virtually everything the credit card can do. Think the debit card has more risk than the credit card? Wrong! VISA’s regulations require the member’s bank to offer the exact same protections from theft or fraud.
Myth: If you pay off your credit card each month, you get the free use of someone else’s money.
Truth: 60% of people don’t pay off their cards every month. Card companies put out all kinds of bait to get you to use their card: a discount at the register, airline miles, a free hat, etc. Think about it. Why do they try so hard to get you as a member? The answer is, you LOSE and they WIN. You won’t wear the hat, and consumer reports says 75% of the airline miles go unused.
Even if you do pay off your balance each month, you still lose. A study by Dunn and Bradstreet shows that users spend 12-18% more with plastic than cash. It hurts when you spend cash, therefore, you spend less.
So, what do rich people do? THEY DON’T GET RICH WITH FREE HATS, AIRLINE MILES AND THE USE OF SOMEONE ELSE’S MONEY! What do broke people do? They use credit cards. 69% of bankruptcy filers say credit cards were to blame for them filing.
Posted in Dave Ramsey
by Shawn Knight
on March 13, 2008
Before Dave gets into his 7 Baby Steps to getting out of debt and building wealth, he covers several “debt myths” that most people have been lead to believe are fact. People can’t imagine being without debt… a car without a payment, a house without a mortgage, a student without a loan and credit without a card. Just imagine what you could do with all of that extra income each month! There are a good bit of myths covered in the Total Money Makeover, so I will split them up into two separate posts. So yeah, here we go with the first batch.
Myth: Debt is a tool and should be used to create prosperity.
Truth: Debt adds considerable risk, most often does not bring prosperity and isn’t used by wealthy people as much as we are led to believe. Over time, debt brings on enough risk to offset any advantage that could be gained through leverage of debt.
Dave gives us a great analogy here. Have you ever seen that kid in the store pitching a total fit because he/she “wants something NOW”? Our culture has taught us to be just like this 3-year-old, to live for the NOW… and we can get it, if we are willing to go into debt. Just remember, there is no shortcut to any place worth going.
Another good analogy is this: if you want to be debt free and build wealth, you must find common things, common grounds with those who have made it. If you want to be skinny, study skinny people. If you want to be rich, do what lots of rich people do. When surveyed, 75% of the top 400 richest people from the Forbes 400 said the best way to build wealth is to become and stay debt free. These people lived on less than they made and didn’t buy things unless they had cash!
Myth: If I loan money to a friend or relative, I am helping them.
Truth: If I loan money to a friend or relative, the relationship will be strained or destroyed. Think about it… the only type of relationship that would exist would be where one person is the “master” and one person is the “slave”. Sure, that person might get upset when you decline to loan them money, but they will get over it. Financial debts often ruin life-long friendships and relationships.
Have you ever loaned someone money, only to have them not pay you back on time… or at all? I have. I let a friend borrow $13 in high school and it took him SEVEN months to repay me. He had the money within a week, but he just refused to pay me and would rather spend the money on himself. Not cool.
It is fine if you give money to a friend in need, granted you have the extra money, but loaning them money will only lead to bad things. Don’t do it.
Myth: By co-signing a loan, I am helping a friend or relative.
Truth: Be ready to repay that loan. The bank isn’t stupid; they wanted a co-signer for a reason, and that reason being that there is a very high chance that the person won’t pay. People co-sign on loans simply out of emotion and don’t put any logical thought into it. Much like the previous myth, it will lead to a damaged relationship, damaged credit and money out of your pocket. Don’t do it.
Myth: Cash advance, payday loans, rent-to-own, title pawning and tote-the-note car lots are needed to help lower income people get ahead.
Truth: These rip-off examples of predatory lending are designed to take advantage of low income people and benefit only the owners of these companies making the loan. If you have ever noticed, these places are only found in low-income sections of town… that is because wealthy people aren’t dumb enough to fall for this.
Let’s take a look at some examples. First, the rent-to-own store. People purchase items at these places because they “possibly can’t afford to buy” whatever item it is they want. They look at how much a week is being asked and think “I can afford this”. Wrong!
Rent-to-own places have effective interest rates of over 1,800%! Take the average washer and dryer set, which would cost you $20 per week… for 90 weeks. Do the math, folks, that is $1,800 for the set. If you had saved $20 per week for 10 weeks, you could have bought the scratch-and-dent model off the show floor of that same rent-to-own store for $200, or bought a used set off Craigslist.
Lower income people will remain at the bottom if they fall for these shady practices.
Myth: 90-days same as cash equals using other people’s money for free.
Truth: It is not the same as cash. This is silly marketing that people fall for. We buy things we don’t need, with money we don’t have, to impress people we don’t really like. Think about that… it’s exactly true. Why else do women spend so much money on makeup, plastic surgery, etc.? Why do teens spend so much on name-brand clothes? Why do we buy the latest and greatest tech gadgets? It’s all to impress people.
Here are two reasons that Dave gives to prove that 90-days is NOT the same as cash. First, if you will flash cash in front of a store manager who has a sales quota to meet, you will likely get a discount. If you don’t, go to the competitor.
Second, most people don’t pay off the debt in the allotted time. Nationally, 88% of these types of debt don’t convert and you are charged an interest rate of 24-38%, and they back charge you to the date of purchase.
If that red-faced kid, “I WANT IT, I WANT IT NOW”, rules your life, you will stay broke!
More debt myths busted in my next Dave Ramsey update!
Posted in Dave Ramsey
by Shawn Knight
on March 7, 2008
I mentioned Dave Ramesy’s Total Money Makeover in a recent post, and true to my word, I am going to outline the entire plan here on my blog, step by step. Before jumping head-first into the 7 Baby Steps, we need to cover a few things.
As mentioned in the previous post, the Total Money Makeover is a challenge… and the challenge is YOU. You are the king of your future, and it is very important to realize that from the get-go. Financial success is 80% behavior and 20% head knowledge. Most people know the “right” thing to do, they simply don’t do it. Why? Because we live in a world of instant gratification; when you want something, you want it NOW. Who wants to wait to get something that you can have now with credit? It’s all about discipline and simply “growing up”.
90% of problem solving is realizing that you do indeed have a problem. Once you admit that you have a problem with money, you are well on your way to rectifying that issue. If you are the type of person that is “never wrong” or always puts the blame on someone else… well, grow up, get over it! Nobody is perfect, including you. Accept responsibility for your actions, both previous and current.
Being Financially Fat.
70% of Americans live paycheck to paycheck. Dave describes many people as being “financially fat”. Much like people get fat, you can get fat with your spending and expenses. When you are physically fat, it’s hard to be in denial. When you are financially fat, you can fake it, and look good… for a while.
The sad thing in today’s world is that you don’t even have to be financially fat to have a problem. You can be financially mediocre, “financially flabby”, and still be average. This is considered “okay” by many people’s standards. I am “getting by”, “surviving”… so nothing is wrong. Not true! If you are fine with just making ends meet, good for you, but if you really want to make something of your life and HAVE something, you need to make a change.
Once you realize you are financially fat, in debt and really have that desire to change, it’s time to start the next process, which I will cover in my next Total Money Makeover post.